Charitable Deductions for You, Me and Warren Buffet

Here’s a fact that may surprise you: lower income people give far more to charity than people in the upper income brackets. And yet the laws for charitable giving bend over backwards to accommodate high-income charitable givers, and often don’t allow low income people to get a deduction at all.

The reason is that only people who itemize their deductions get to claim charitable deductions, and lower income households usually don’t itemize. Here’s a quick primer:

Every person filing taxes gets a personal exemption of $4050 for every taxpayer and dependant claimed on her return. In English, this means that everybody’s first  $4050 of income is automatically tax-free. If you are married with three kids, you only pay tax on any money you make over $20,250 ($4050 personal exemption x 5 people).That’s true for you, me, and Warren Buffett.  read more...